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Comment by wrong_variable | Hacker News Reader

wouldn't that be transferred to the kids ?

There is a growing theory that the majority of working middle class retirees will reverse mortgage their homes in retirement in order to supplement their cost of living (and pay inflated nursing home, health care, and end of life costs), leaving their kids with much less than expected inheritance. This would also exacerbate the inequality gap as wealthier families would have no need to go into debt and would rather continue to accumulate assets. Watch for Wall Street and associated marketing channels to put out financial products that make it ''stupid simple'' to qualify for and execute on a reverse mortgage as the start of this trend.

They will also live 10+ more years than projected government estimates, further exhausting Social Security and other benefit programs. It's been well acknowledged in the financial planning world that many will run out of their nest egg halfway through retirement, and die in debt.

Easy reverse mortgages are already advertised on TV.

Yeah I remember seeing them on TV in Canada over 10 years ago.

Yeah The Fonz started hawking them about 5 years ago.

Tapping in to a homes equity requires a loan, and yes, those loans will be transferred to their children.

EDIT: Yes I meant the loans stay with the estate which services the debtors. The house that is typically handed down to the next generation is now sold to make whole the debt.

Your debts do not pass to your children when you die. The worst that happens is that the debts are paid out of the child's inheritance.

Not always the case.

Pennsylvania for example does have filial responsibility laws where under very specific circumstances debt incurred by the parents can be transferred to the children. One example is nursing home/end of life care, regardless of whether or not the child had any role in it.

Source: I live in PA. My elderly parents live in PA.

I looked into this because I thought it was a little odd. The only precedence I can find of this is a single lawsuit, the PDF of which is here:

http://www.pacourts.us/assets/opinions/Superior/out/A36025_1...

This really doesn't have anything to do with inheritance, especially so since his mother wasn't (and presumably still isn't) deceased. It has to do with some states having laws requiring parents/children, who have the means to do so, to support their child/parent who is poor or otherwise incapable of supporting themselves.

In this court case, the child was found to be financially capable and also legally liable for supporting his mother. Because of this, he was found responsible for paying off the debt, but only as he was capable of doing so.

If the son in this case only made the national median income, had a large family to support, and didn't have any wiggle room in his budget, he very likely would not have been found liable for this debt.

I think he meant a loan secured by property that the kids would otherwise expect to inherit free and clear.

Unless the contracts are dumb, the house will be the security for the loan, so it 'transfers to the kids' in the sense that they don't get the house, but it would be really stupid to allow reverse mortgages or home equity loans to be attached to anything other than the house.

What other asset do most middle-class retirees have? Social security and pensions aren't inheritable, and much of what liquid assets they have will go to medical care.

I dunno, I just felt like the phrasing was unclear.

That the parents are in a situation where they decide to sell their house to support their lifestyle is perhaps worth examining, but that's the problem, not that the contract they enter into has to be settled.

FWIW, there are definitely people hawking full-recourse refis.

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